U.S. Shale Plays Not Just About Natural Gas But Oil As Well

The major oil companies have discovered that focusing on crude oil trapped deep underground in liquids – rich shale formations, such the Eagle Ford Shale, Niobrara Shale and Barnett Shale “combo”, is much more profitable than drilling for natural gas alone.

New unconventional reservoirs, including tight sands and shale formations across the country are proving to hold billions of barrels of crude, recoverable by horizontal drilling. For many years, immature oil shales such as the Green River formation were touted as the cure for our domestic energy problems. There is more oil trapped in U.S. oil shales than in all of Saudi Arabia, but the problem is that these immature shales, which are near the surface, contain more kerogen than crude. Drilling into them will not produce any oil unless the shale is heated to cause the kerogen to be converted to oil. This requires a lot of energy. Now a new kind of shale play has arrived and it is generating big profits for investors. Free oil is present in a number of deep, mature shale formations across the continent.

Some of the major shale gas plays that have been thought of as only about natural gas, are turning out to be significant oil producers. The largest “drillable” U.S. oil shale is the Bakken formation, located in North Dakota, Montana and Canada. The amount of oil in the Bakken Formation may exceed 4 billion recoverable barrels according to a study done by the U.S.G.S.

In addition to the Bakken shale formation there is oil in the Barnett shale or “Barnett Combo” near Ft. Worth Texas and Eagle Ford shale south of San Antonio Texas. With natural gas prices depressed due to the overwhelming amount of shale gas on the market some oil companies such as EOG Resources are focusing their capital on developing oil bearing shales using horizontal drilling. Horizontal drilling is the single most important new technology in the oil and gas industry and is responsible for expanding the domestic supply of natural gas by more than twice what it was two decades ago. Now oil from shale may be the most significant new development in the U.S. energy picture. New research is showing that shales such as the Eagle Ford shale in South Texas may supply billions of barrels of domestically produced oil.

Below is an illustration of how a horizontal well is drilled through a formation such as the Barnett shale to recover oil and gas.

Exposing more profile of the shale results in higher production.

One of the leaders in the shale oil game is EOG Resources. They hold a 580,000 acre position in the Eagle Ford shale oil and gas windows, as well as roughly the same amount of acreage in the oil rich North Dakota Bakken formation. The Bakken formation is the fifth largest oil discovery in the United States, including Alaska. Now the Eagle Ford shale may be, according to EOG’s estimates, the sixth largest domestic oil discovery. Their lease area alone may hold well over a billion barrels of oil. The Eagle Ford is a brand new shale oil play and estimates of how much oil it contains are still in the works. Wells in the Eagle Ford shale are showing initial production rates of between 400 and 1500 barrels a day.

Overcoming Old Misconceptions About Shale and Oil

The first misunderstanding is that there is only one kind of oil shale, those that are near the surface and which must be mined or heated in-situ to make oil. The U.S. holds the most reserves in the world of that kind of oil shale, but it is not currently economical to exploit it as a source of crude oil. The kind of shale formations that are economically viable for oil production, using horizontal drilling and hydraulic fracturing, are thermally mature and located deep underground. In these deep shales, much of the kerogen has been converted to oil and is present in the rock matrix in liquid form. A second thing that has held back exploration for oil in shale is that many believed that the oil molecule, at 0.5+ nanometers, was too large to flow through small matrix “pore throat” or spaces between the rock particles typical in many shale formations. Extensive research by EOG Resources and others has proven that shale formations such as the Eagle Ford actually have a fair amount of porosity and permeability which can allow for long term oil recovery. The illustration below from EOG shows how oil can flow through a shale reservoir.

The map of the Eagle Ford shale seen below shows the oil producing area where companies such as EOG Resources, Petrohawk, Pioneer Resources and others are focusing large amounts of capital to recover potentially billions of barrels of crude oil in South Texas. New evidence from a series of test wells over a 125 mile long area shows uniformity of the reservoir and the potential to be the sixth largest oilfield ever discovered in the U.S.A.

If you are interested in new shale oil discoveries such as the Eagle Ford then you may want to bookmark this site and return as we report more news from these exciting discoveries. For extensive coverage and a map of the Eagle Ford Shale see the Eagle Ford Shale Blog